Occasional X: The foul spirit of political economics (CDXXIII)

“Hayek has taught us this lesson about pricing, over and over again. Free-market prices have an important role to play in our society, in our economy. They convey precious information.” (Walter Block) Hayek never understood profit and, by logical consequence, how the markets function. His efficiency story is a benign interpretation of what the price mechanism, i.e., the Invisible Hand of the Oligarchy, really does. The free-market system is, in the last instance, a quasi-Darwinian selection mechanism, i.e., the economic analog to triage in medicine. For example, during a famine, only the rich person can pay the high price of bread and survive. In contrast, the poor person leaves the market empty-handed to die of starvation. The market's primary function is NOT efficient information-processing/resource-allocation (Hayek's hallucination) but the redistribution of the Quality-of-Life. In economically extreme situations, the Invisible Hand kills anonymously. Because the price mechanism is a powerful tool, the most important task of an economist ― who is smart enough to know on which side his bread is buttered ― is to praise its informational magic, its efficiency, or its welfare effects. This distracts from the fact of selection. The optical illusion is this: the price is co-determined by nominal demand, and demand depends on different earnings, profit distribution, and different accumulated wealth. The price structure distributes, in any period, real output/wealth to already existing financial wealth. It distributes the Quality-of-Life. The problem is that richness often does not come from merit but from fraud, exploitation, organized crime, primitive accumulation, stealing innovative ideas, or from big-style printing counterfeit money. The quasi-Darwinian free-market selection mechanism increases the survival chances of the corrupt and decreases it for the honest. For details, see How it works https://t.co/lqv0W118dK The price mechanism has not much to do with abstract optimal allocation of resources but makes sure that the Quality-of-Life is ultimately allocated to the Oligarchy. Everybody understands that macroeconomic profit must be greater than zero. Otherwise, firms go bankrupt, and the breakdown starts. Therefore, profit has existential primacy in the free-market economy, not utility/profit-maximizing free people on free-markets or optimal allocation. The axiomatically correct macroeconomic profit formula reads: Qm:=Yd+(I−Sm)+(G−T)+(X−M). It holds for every monetary economy, independently of political ideology. Macroeconomic profit is equal in Capitalism and Socialism according to the Profit Law. The Profit Law implies Public-Deficit-is-Private-Profit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 must be considered a critical factor for Capitalism's survival. Capitalism is temporarily saved from breakdown by the deficit-spending/money-creating duo of Treasury/Central Bank, i.e., the State. The State has existential primacy, not the free-market or the price system. Capitalists and Socialists have never really understood what profit was. Friedrich Hayek never came intellectually above the microeconomic level and fell foul of the Fallacy of Composition. He was not a competent scientist but a political agenda pusher. More precisely, Hayek was a political agenda pusher for the Oligarchy in the guise of science. He added intellectual corruption to the system of financial corruption.

— AXEC (@EgmontHandtke) November 2, 2026